Saudi Arabia completes first phase of flour mills privatization

The National Center for Privatization and PPP (NCP) and the Saudi Grains Organization (SAGO) announced finalizing the first phase of its flour milling sector privatization, NCP said in a statement.

Under the privatization process, a 100% of the First Milling Co. (MC1) and Third Milling Co. (MC3) were sold to strategic investors in the private sector for SAR 2.777 billion.

Financial offers were received on Sunday, July 5.

MC1 was awarded to AlRaha AlSafi consortium at SAR 2.027 billion, while MC3 was awarded to Alrajhi-Ghurair-Masafi consortium for SAR 750 million.

The ownership transfer is subject to legal conditions that should be fulfilled before closing the deal, the statement added.

HSBC Saudi Arabia was the financial adviser for the deal.

The qualification phase for the second and final stage of the privatization of the flour milling sector will launch shortly and include the sale of the second and fourth milling companies. The process is expected to be completed by the end of this fiscal year.

On June 9, the Saudi Cabinet licensed the first, second, third and fourth milling companies (MCs) and transferred their full ownership to NCP.

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MC1 was established in October 2016. It operates through branches in Jeddah, Qassim, Tabuk and Al-Ahsa. MC1 reported 811,000 tons of flour, 178,000 tons of feed and 172,000 tons of wheat derivatives in 2019.

MC3 was also incorporated in October 2016 with three branches in Khamis Mushait, Al-Jumum and Al-Jouf.

MC3 reported 564,000 tons of flour, 130,000 tons of feed and 121,000 tons of wheat derivatives in 2019.

The Raha AlSafi consortium was led by Saudi Arabian firm Almutlaq Group and also including Al Safi, Abunayyan Holding and United Arab Emirates-based Essa Al Ghurair Investment, said a source familiar with the matter, adding investment bank Canaccord Genuity acted as the financial adviser.